As the Australian Government's Scams Awareness Week closes, it is worth highlighting perhaps one of the oddest scams of recent times.

In Texas last month, the self-proclaimed ‘Money Doctor’, the 80 year-old William Gallagher was sentenced to three life prison terms in Tarrant County for defrauding investors. This is in addition to a 25 year term for similar offences in Dallas County.

The Money Doctor bought time on a Christian radio station where he gave financial advice with a Christian theme, signing off his broadcasts with ‘see you in Church on Sunday’.

One of the most bizarre investments he promoted through his Ponzi scheme was a plan to use a satellite via a company called Hoverlink to shine holographic advertising down to Earth. Over time, Hoverlink morphed from a hoverboard rink to a cancer-curing pharmaceutical to law enforcement body armour before going galactic with its satellite plans.

It was all a scam. Yet people piled into the schemes, all neatly packaged in religious wrapping.

It reminds me of the time I gently nudged ASIC to force a Qld company to issue a supplementary prospectus to protect investors' interests.

A former sportsman who moved into property development was looking to swap his high levels of bank debt for income securities, issued mainly to retirees.

Investor presentations were organised in regional areas, including in church halls, offering returns around 12% p.a.

In my view, this was an attempt to replace sophisticated Big 4-type lenders with unsophisticated investors. A couple of phone calls to real estate agents quickly uncovered that the sales data in the prospectus was somewhat misleading.

The ex-sportsman was on a generous salary and car package and the company had licensed the use of his name at significant annual cost. Given how the company had performed to that time, it was arguable that killing off all these costs and installing a new CEO may have been a better option.

In the end, ASIC forced the issue of a supplementary prospectus and, given the delay, only a paltry sum was raised.

Unfortunately, the company collapsed a number of years later leaving over 150 small creditors out of pocket to the tune of $17 million. It seems the fund raising hadn't ended with the supplementary prospectus. His company was apparently subsequently offering returns as high as 20% p.a. paid monthly to lure investors.

In the end, slow property sales, poor land purchase decisions and mountains of lender debt (some at 30% p.a.) and investor debt brought the company down. Ex-sports personalities don't necessarily make good business people. Cold comfort to those who lost money.

A Christian talk show host promised to enrich clients. His Ponzi scheme bilked them out of millions.

November 2021

The content of this publication is intended to provide a general overview on matters which may be of interest. It is not intended to be comprehensive. It does not constitute advice in relation to particular circumstances nor does it constitute the provision of legal services, legal advice or financial product advice.